All Forum Posts by: Stacy Raskin

Some loan options are:

If you're looking to buy a property that's not move-in ready:

You can get a fix and flip loan for an investment property with up to 90% of the purchase price and 100% of the rehab budget with up to 75% of the ARV. The borrower is coming in with only 10% of the down payment if approved. The number usually varies from 10-20% depending on credit score, property analysis, etc.

Some lenders will work with any level of investor experience, credit scores as low as 660 and can close in as little as 10 days (there are loan options for 640-660 credit scores- they require 20% down).

Another good thing is interest only and 6-24 month loan terms- you can refinance by selling or refinancing to a long term DSCR rental property loan at any time once you complete the rehab.

Once the property is ready you can sell it or if you want to keep the property as a long term investment, you can underwrite the loan based on your income /debt to income (DTI) ratios or you can go the DSCR route where the loan is underwritten based on the actual or market rents from the appraisal.

DSCR loans won't use your income to underwrite the loan.

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350, Insurance = $100, Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100, Association Dues = $25

Total PITIA = $1875 Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Happy to connect to discuss further.

Our company works with foreign nationals. Loan options depend on whether you live in the U.S., live elsewhere, have U.S. credit or visa. There's also different options for different states as lenders are licensed in each state. 

Leverage will depend on lender but generally 70-75% and rates are in the 7s and 8s.

Happy to connect to discuss further. 

There are DSCR loans that will use the new appraised value after three months seasoning period. DSCR loans won't use your income to underwrite the loan.

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350, Insurance = $100, Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100, Association Dues = $25

Total PITIA = $1875 Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Happy to connect to discuss further.

Some options are paying in cash and pulling the cash out once the property can have an appraisal that will be marked "as is" (so no work needs to be done to the property to make it habitable). 

You can also wait (usually a minimum of three months) to use the new appraised value to pull your cash back out. 

Other options are a hard money loan for the purchase and rehab.

If you're looking to buy a property that's not move-in ready:

You can get a fix and flip loan for an investment property with up to 90% of the purchase price and 100% of the rehab budget with up to 75% of the ARV. The borrower is coming in with only 10% of the down payment if approved. The number usually varies from 10-20% depending on credit score, property analysis, etc.

Some lenders will work with any level of investor experience, credit scores as low as 660 and can close in as little as 10 days (there are loan options for 640-660 credit scores- they require 20% down).

Another good thing is interest only and 6-24 month loan terms- you can refinance by selling or refinancing to a long term DSCR rental property loan at any time once you complete the rehab.

Once the property is ready you can sell it or if you want to keep the property as a long term investment, you can underwrite the loan based on your income /debt to income (DTI) ratios or you can go the DSCR route where the loan is underwritten based on the actual or market rents from the appraisal.

DSCR loans won't use your income to underwrite the loan.

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350, Insurance = $100, Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100, Association Dues = $25

Total PITIA = $1875 Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Happy to connect to discuss further.

@Marcus Auerbach, there are plenty of lenders who use a DSCR 1 ratio and base the rents on actual rents or the rents on the appraiser market rent survey. I've seen NOI come into play for 9+ units but unusual if your lender is using NOI for a DSCR loan for a single family property.

DSCR 1 ratio will get you best terms depending on your credit and LTV for many lenders who specialize in DSCR loan products which in many cases isn't banks or credit unions as they don't feel as comfortable with the products as conventional loan products.

As far as getting best rents, I've seen professional photos make a huge difference and depending on your local market placing it all the typical property sites like Zillow, Trulia, etc. If you're already doing professional photos and highlighting the remodel in the listing ads, that should help with getting best rents for your local area. 

Happy to connect to discuss further. 

When looking at lender fees important to find out if a conventional loan if the loan is borrower paid (BPC) or lender paid compensation (LPC). All brokers and lenders get paid to work on a loan- some are just not up front about it. Borrower paid compensation is paid at the close of escrow. Lender paid compensation is when the rate goes up on the loan to pay the lender for the so it might take a 8.125% base rate to 8.375%. This varies based on the percentage of the loan the lender or broker is charging for the work. 1.5-2.75% of the loan amount is in the ball park of average but there are lenders and brokers who charge more or less. A lender or broker is more likely to charge less if a higher value loan. It's the same work to do a $90K compared to a $900K loan and most lenders and brokers have a minimum that they will want to make per loan. 

When looking at cash to close, important to look at the lender fees such as an underwriting fee, origination or broker fee. 

Other cash such as down payment or money to fund your escrow / impound accounts (accounts that most lenders require for your property tax and homeowners insurance shouldn't be included in lender fees). Some lenders will waive escrow accounts- some for free depending on the loan product and down payment and some with a .25 add to the current rate. 

With DSCR loans, most borrowers go borrower paid / pay the lender or broker the fee for their work at the close of escrow.

The big difference between conventional and DSCR loans is that DSCR loans won't use your income to underwrite the loan. Conventional loans will use your income and debt ratios to underwrite the loan.

More info on DSCR loans in case helpful:

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350, Insurance = $100, Association Dues = $50

Total PITIA = $2200

Rent = $2000

DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100, Association Dues = $25

Total PITIA = $1875 Rent = $2300

DSCR = Rent/PITIA = 2300/1875 = 1.23

DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

Happy to connect to discuss further. 

$105K appraised value at 75% LTV will get you $78,750 before lender fees. The loan will need to be underwritten by your income or the rent schedule depending on the type of loan it is.

This will depend on what the appraisal comes back at (the appraisal generally needs to be ordered through the lender), the rent schedule or actual rents if a DSCR loan and the fees on the loan. That data is needed to know definitively if you will get all your money back.

 If it's a cash out refinance and generally most lenders want at least a three month waiting period to use the new appraised value if rehab was done (waiting period also called a seasoning period between the last loan or purchase of the property and the new loan).

Many lenders will go up to 75% of the appraised value. If a DSCR loan, a rental property survey will be done as part of the appraisal process.